Start an Alabama LLC: A Step-by-Step Walkthrough

Alabama does something most states don't: it requires you to reserve your LLC name with the Secretary of State before you file the document that creates the company. This is not optional and it is not the same as a casual availability check. You apply for a Certificate of Name Reservation, the state checks that the name is distinguishable from every other entity on file, and a copy of that certificate is attached to your formation filing.

Start by searching the state's free business entity name database to see whether your name (and close variations of it) is already taken. Then file the reservation through the Secretary of State's Online Services portal, where it costs $28 and the certificate prints immediately, or by mail for $25. A reservation holds the name for one year and can be renewed for another year during its last 90 days.

Name requirements

• Must contain "Limited Liability Company," "L.L.C.," or "LLC"
• Must be distinguishable from all other entity names registered in Alabama: differences of punctuation, spacing, or filler words like "the" often do not count as distinguishable
• A name that suggests a licensed profession (engineering, architecture, law, medicine) needs a copy of an Alabama license or a letter from the licensing agency

Once your reservation is confirmed, the name is held for you and you can proceed to the formation filing. Because Alabama enforces this sequence, we reserve the name and file the Certificate of Formation as a single connected process. You never have to track two separate steps.

Before the Certificate of Formation can be filed, you need a registered agent lined up, because the agent, the agent's Alabama street address, and its county are named in the filing. Alabama law requires every LLC to keep a registered agent at a registered office in the state for the entire life of the company.

The registered agent is who receives lawsuits, subpoenas, and official Secretary of State correspondence on the company's behalf. The registered office has to be a street address in Alabama where process can be personally served. A P.O. box, a mailbox service, or a telephone answering service on its own does not count.

Who can be your registered agent

• You: If you are an Alabama resident with a street address in the state, you can be your own agent. Your address becomes part of the public record.
• Another individual: Any Alabama resident with a street address in the state, such as a partner, an employee, an attorney, or a trusted contact.
• A business entity: An Alabama entity, or an out-of-state entity registered to do business in Alabama, such as a commercial registered agent service. It keeps a professional address on the public record instead of yours.

Why the choice matters

If you list your home as the registered agent address, it becomes searchable in the public business record. The statute also requires the agent to keep a business office at the registered office address and bars an agent from working solely through a virtual office or mail forwarding, so a cheap forwarding address won't do. Many owners use a commercial service to keep a home address private and to have papers handled when they travel. Switching agents later is a $100 statement of change.

The Domestic Limited Liability Company Certificate of Formation is the filing that legally creates your LLC. You file it with the Secretary of State through the Online Services portal by choosing "Domestic Formation," and a copy of your Certificate of Name Reservation goes with it. Online, the fee is $208 by card: $100 for the Secretary of State and $100 for the county, plus the portal's own charge. By mail it is $200, sent as two typed copies with a self-addressed, stamped envelope.

Alabama publishes no processing time for formations and lists no expedite fee for entity filings. If you file online, nothing is mailed to you, and the portal keeps your documents available to download for only 15 days, so save them the day they arrive.

What goes into the Certificate

• LLC name: The exact name you reserved, including the required LLC designator
• Name reservation: A copy of the Certificate of Name Reservation, attached
• Registered agent: The agent's name, Alabama street address (no P.O. boxes), county, and an optional Alabama mailing address
• Members: A statement that the LLC has at least one member
• Special status: Series, professional, or nonprofit checkboxes, if any applies
• Effective date: On filing, or a delayed date no more than 90 days after signing
• Organizer: The signature of the person forming the company

What you don't have to include

You do not list members, ownership percentages, or any financial information. The Certificate is a short public formation record. Your operating agreement carries the internal details and never becomes public.

An operating agreement is your LLC's internal rulebook. Alabama does not require you to file it with the state, and it never enters any public database, but you should have one in place before you start doing business, add members, or open accounts.

What a solid operating agreement covers

• Ownership: Each member's name and ownership percentage, and how interests are expressed
• Capital contributions: What each member put in at the start and what future contributions may be required
• Profit and loss allocation: How profits and losses are split, usually by ownership percentage, but it does not have to be
• Distributions: When and how money is paid out, and in what priority
• Management: Who runs day-to-day operations, their authority, and which decisions require a member vote
• Voting: Whether votes are weighted by ownership or counted per member
• Transfers: What happens when a member wants to sell or exit: rights of first refusal, approval requirements
• Dissolution: The circumstances for winding down and how remaining assets are distributed

For single-member LLCs the agreement reinforces that the company is genuinely separate from you, which matters if anyone ever challenges your liability protection. For multi-member LLCs it is essential. Without one, Alabama's statutory defaults under Title 10A govern everything, and those defaults rarely match what the members actually intended.

An Employer Identification Number is a nine-digit federal tax ID from the IRS, issued at no cost. Think of it as a Social Security number for the business. You use it on tax filings, to open bank accounts, and to hire employees.

When you need one

• Your LLC has more than one member (multi-member LLCs file a partnership return and must have an EIN)
• You plan to hire employees
• You want a business bank account. Most banks require an EIN
• You've elected S-corporation or C-corporation tax treatment

A single-member LLC with no employees can technically use the owner's Social Security number for federal purposes, but getting an EIN is still worth it: it keeps your SSN off business paperwork and streamlines banking.

How to apply

Submit your application on IRS.gov using the IRS EIN Assistant. It runs roughly ten minutes to complete, and the number comes back right away, ready to use that same day. You need a US Social Security number or ITIN to apply online; applicants without one apply by fax or mail using Form SS-4. The IRS charges nothing for the number. When Mainstay forms your LLC, we apply for the EIN for you once the Certificate of Formation is on file.

Keeping business and personal money separate is not just good bookkeeping. It is what preserves your liability protection. Pay personal bills from the company account or run business income through your personal checking, and you hand a plaintiff the argument that the LLC is a sham and its shield should be ignored.

What most banks ask for

• Your filed Certificate of Formation (the formation record from the Secretary of State)
• Your IRS EIN confirmation
• Your operating agreement (many banks require it; bring it regardless)
• Government-issued ID for every authorized signer

Local Alabama community banks and credit unions are often more flexible with brand-new LLCs than large national chains, and several online business banks can open an account without a branch visit. Weigh each option's monthly charges, transaction caps, and required minimum balances before signing up.

Alabama makes the aftermath refreshingly light compared with most states, but a couple of things still need your attention.

No Secretary of State annual report

Alabama LLCs don't file an annual report with the Secretary of State. The only annual reports filed there are for for-profit and professional corporations, so the missed-report problem that knocks businesses out of good standing elsewhere doesn't arise for an Alabama LLC.

Business Privilege Tax

The recurring item to check is the Alabama Business Privilege Tax, handled by the Alabama Department of Revenue. It is based on net worth. Since 2024, an LLC whose tax works out to $100 or less owes nothing and files no return. If yours is higher, Form PPT (for an LLC taxed as a pass-through) is due on the same date as your federal income tax return, and a late return costs 10% of the tax shown or $50, whichever is greater.

Registered agent and taxes

Keep your registered agent current; a statement of change with the Secretary of State costs $100 if the agent moves or you switch. On the federal side, single-member LLCs file Schedule C, multi-member LLCs file Form 1065, and S-corp elections file Form 1120-S. If you sell taxable goods or services, register for Alabama sales tax with the Department of Revenue. Your state and county business licenses come from the probate judge or license commissioner in each county where you do business.